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TMT - Trematon Capital Investments Limited - Unaudited Interim Results for the

Release Date: 10/05/2012 10:52
Code(s): TMT
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TMT - Trematon Capital Investments Limited - Unaudited Interim Results for the six months ended 29 February 2012 TREMATON CAPITAL INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1997/008691/06) Share code: TMT ISIN: ZAE000013991 ("Trematon" or "the company") Unaudited Interim Results for the six months ended 29 February 2012 DIRECTORS` REVIEW Commentary on financial results Net asset value at the end of the period was 109 cents which is a nominal improvement since year-end. Earnings per share increased by 10.3% when compared to the previous interim period and headline earnings showed a marginal improvement. The group remains in a healthy financial position with negligible gearing at the centre and further capacity to enter into investment transactions. The financial position will be further enhanced when the proceeds from the sale of Trematon`s interest in Boulevard Park Trust ("BPT") are realised in the current financial period. This disposal was announced on SENS on 26 March 2012. The emphasis of the investment portfolio has shifted away from mature investments to new investment opportunities. This is reflected in an increase in investments in joint ventures. These investments have a negligible impact on NAV in the short term but are expected to contribute materially in the future. Investments in associates has declined because BPT was reallocated to "non- current assets held for sale". Group revenue includes interest income, dividends and the sale of properties at Club Mykonos. Dividend receipts increased materially whereas land sales are down on the prior period. Trading losses were incurred during the period. All head office and operating expenses are accounted for in this line item. The biggest component of trading losses was the mark-to-market of shares held in Grand Parade Investments Limited ("GPI"). GPI paid a special dividend of 60 cents per share during the period, this resulted in a price decline although there were no actual losses realised because the price decline was offset by dividends received. Profit from equity accounted investments reflect equity accounted profits from Mykonos Casino and Arbitrage Property Fund (Proprietary) Limited ("Arbitrage") and small losses from other start up operations. Cash utilised in new ventures during the period amounted to R40 million. These include additional jetties and a boat storage facility at Club Mykonos as well as new property ventures as set out below and trading opportunities. Commentary on individual investments Club Mykonos Langebaan Limited ("CML") CML has continued to improve steadily. Improved efficiencies have resulted in a small operating profit from resort operations for the period. The CML group made a profit of R4.5 million for the period, the biggest component of which is generated by equity account profits from the Mykonos Casino. The 56 new jetties have been installed and are fully let. Phase 1 of the boat storage facility is nearly complete and is on budget. The boatyard is not expected to contribute to profits in this financial year but is expected to yield good returns once phase 2 becomes operational in 2013/2014. Sales of property were very subdued during the period and there has been no discernible recovery in the property market on the West Coast. Mykonos Casino`s contribution to equity accounted profits declined slightly when compared to the previous interim period. Trematon and CML have jointly announced a scheme of arrangement which is intended to enable the purchase of the interests of the remaining minorities in CML. The details of the scheme were announced on SENS on 20 March 2012. The results of the scheme meeting were announced on SENS on 9 May 2012. Other investments Other group investments currently include direct and indirect stakes in Mazor Group Limited and Grand Parade Investments Limited. The group trades actively in a variety of listed and unlisted investments. Direct Property Investments Boulevard Park Trust ("BPT") The 37.5% beneficial interest in BPT has been sold for an aggregate consideration of R39.3 million of which R16.6 million will be allocated to the repayment of Trematon`s loan accounts and R22.7 million will be accounted for as a capital gain in the current financial year. Details of the proposal were announced on SENS on 26 March 2012. Arbitrage Property Fund (Pty) Limited The agreements totalling R174 million which were referred to at year-end have all been implemented and the fund has several potential transactions under review. The fund, which is focused on commercial and industrial real estate, generated a small profit for the period. The focus of the fund is on selective opportunities where we believe we have an opportunity to add value in a relatively short time-frame. Trematon provides proportionate and mezzanine finance to the fund at market related rates. The Resi Investment Trust ("Resi") Resi is a joint venture with RBK Properties (Proprietary) Limited. The business is focused in the Western Cape and aims to purchase well located and well priced large scale residential schemes which are complete or partially complete. To date Resi has invested just over R50 million. The business made a small loss in its start up phase and is operating well within the parameters imposed by the group. Trematon provides proportionate and mezzanine finance to the fund at market related rates. Stalagmite Property Investments (Proprietary) Limited There has been no change in the status of this investment. Trematon owns a 50% share in the company which is ungeared and owns land adjacent to the route of the proposed N2 Winelands Project. Prospects The group`s investment focus has shifted somewhat into new ventures from more mature investments. The realisations detailed above have also increased the resources available for new investment. The group is actively seeking new investment opportunities although the flow of truly attractive deals is sporadic and depends on market conditions. There is not a great deal of annuity income in the group so profits will continue to depend on the timing of investment realisations. STATEMENT OF FINANCIAL POSITION Unaudited Audited 29/28 February 31 August 2012 2011 2011 Notes R`000 R`000 R`000
ASSETS Non-current assets 150 358 171 431 154 110 Property, plant and equipment 12 194 7 939 9 523 Investment properties 11 266 1 786 4 449 Investments 12 324 15 080 14 612 Investments in joint ventures 31 486 1 042 13 417 Investments in associate entities 81 373 144 494 111 470 Deferred tax asset 1 715 1 090 639 Current assets 58 789 98 534 93 710 Loans receivable 10 291 18 725 10 586 Trade and other receivables 5 208 4 120 3 546 Investments 11 054 6 470 10 593 Inventory 28 824 29 150 28 144 Tax receivable 11 12 11 Cash and cash equivalents 3 401 40 057 40 830 Non-current assets held for sale 2 29 443 - - Total assets 238 590 269 965 247 820 EQUITY AND LIABILITIES Equity 199 828 195 542 199 171 Share capital and share premium 203 296 203 296 203 296 Treasury shares (1 276) (3 220) (1 276) Fair value reserve 3 331 5 702 5 299 Share-based payments reserve 3 121 - - Accumulated loss (16 695) (28 999) (18 857) Total equity attributable to equity holders of the parent 188 777 176 779 188 462 Non-controlling interest 11 051 18 763 10 709 Non-current liabilities 4 450 4 837 4 771 Deferred tax liability 4 450 4 837 4 771 Current liabilities 34 312 69 586 43 878 Loans payable 5 400 26 055 16 175 Creditors 6 898 7 139 7 084 Tax payable 9 9 9 Trade and other payables 20 679 21 483 20 610 Bank overdraft 1 326 14 900 - Total equity and liabilities 238 590 269 965 247 820 Net asset value per share (cents) 109 103 108 STATEMENT OF CASH FLOW Unaudited Audited Six months ended Year ended
29/28 February 31 August 2012 2011 2011 R`000 R`000 R`000 Cash flows from operating activities Cash utilised in operations (5 142) (23 050) (4 077) Finance income 2 537 5 686 10 215 Dividends received 6 016 3 505 3 505 Dividends received from associate 4 446 2 694 7 140 Finance costs (732) (1 490) (3 122) Dividend paid (3 476) (2 583) (2 583) Tax paid - (2 744) (2 827) Net cash from operating activities 3 649 (17 982) 8 251 Cash flows from investing activities Acquisition of property, plant and equipment (2 975) (9) (1 856) Acquisition of investment property (6 817) - (2 664) Proceeds on disposal of property, plant and equipment - - 52 Decrease/(increase) in loans receivable 1 568 (13 020) 11 240 Loans repaid by associates - 16 894 - Proceeds on sale of associate - - 33 993 Loan advanced to jointly controlled entities(18 904) - (12 469) Acquisition of held-for-trading and available-for-sale investments (15 560) (17 273) (26 258) Proceeds from disposal of investments 11 245 8 396 12 479 Net cash from investing activities (31 443) (5 012) 14 517 Cash flows from financing activities Change in shareholding of subsidiary - - (28 762) Decrease in creditors (186) (127) (182) (Decrease)/increase in borrowings (10 775) 1 230 (8 650) Shares repurchased - (3 220) - Net cash from financing activities (10 961) (2 117) (37 594) Net decrease in cash and cash equivalents (38 755) (25 111) (14 826) Cash and cash equivalents at the beginning of the period/year 40 830 55 656 55 656 Total cash and cash equivalents at the end of the period/year 2 075 30 545 40 830 STATEMENT OF CHANGES IN EQUITY Total Share Share share Treasury capital premium capital shares
R`000 R`000 R`000 R`000 Balance at 1 September 2010 1 749 201 547 203 296 - Total comprehensive income for the year - - - - Profit for the year - - - - Fair value gain on available-for-sale investments - - - - Net share purchases - - - (1 276) Dividends paid - - - - Change in shareholding in subsidiary - - - - Balance at 31 August 2011 1 749 201 547 203 296 (1 276) Balance at 1 September 2011 1 749 201 547 203 296 (1 276) Total comprehensive income for the year - - - - Profit for the period - - - - Fair value gain on available-for-sale investments - - - - Share-based payment - - - - Dividends paid - - - - Balance at 29 February 2012 1 749 201 547 203 296 (1 276) Share- based Accumu- Fair value payment lated reserve reserve loss Total
R`000 R`000 R`000 R`000 Balance at 1 September 2010 3 197 - (71 725) 134 768 Total comprehensive income for the year 2 102 - 14 756 16 858 Profit for the year - - 14 756 14 756 Fair value gain on available-for-sale investments 2 102 - - 2 102 Net share purchases - - - (1 276) Dividends paid - - (2 583) (2 583) Change in shareholding in subsidiary - - 40 695 40 695 Balance at 31 August 2011 5 299 - (18 857) 188 462 Balance at 1 September 2011 5 299 - (18 857) 188 462 Total comprehensive income for the year (1 968) - 5 638 3 670 Profit for the period - - 5 638 5 638 Fair value gain on available-for-sale investments (1 968) - - (1 968) Share-based payment - 121 - 121 Dividends paid - - (3 476) (3 476) Balance at 29 February 2012 3 331 121 (16 695) 188 777 Minority Total interest equity R`000 R`000 Balance at 1 September 2010 98 738 233 506 Total comprehensive income for the year 517 17 375 Profit for the year 517 15 273 Fair value gain on available-for-sale investments - 2 102 Net share purchases - (1 276) Dividends paid - (2 583) Change in shareholding in subsidiary (88 546) (47 851) Balance at 31 August 2011 10 709 199 171 Balance at 1 September 2011 10 709 199 171 Total comprehensive income for the year 342 4 012 Profit for the period 342 5 980 Fair value gain on available-for-sale investments - (1 968) Share-based payment - 121 Dividends paid - (3 476) Balance at 29 February 2012 11 051 199 828 STATEMENT OF COMPREHENSIVE INCOME Unaudited Audited
Six months ended Year ended 29/28 February 31 August 2012 2011 2011 Notes R`000 R`000 R`000
Revenue 12 358 14 812 19 922 Trading (loss)/profit (6 692) (6 466) 252 Investment income 8 553 9 191 13 721 Finance costs (732) (1 490) (3 122) Reversal of provision - - 5 850 Reversal of impairment/(impairment of loan) 1 274 861 (4 250) Profit from equity accounted investment (net of tax) 2 622 3 269 3 187 Share-based payment expense 3 (121) - - Profit before taxation 4 904 5 365 15 638 Taxation 1 076 170 (364) Profit for the period/year 5 980 5 535 15 274 Other comprehensive income Fair value (loss)/gain on available-for-sale investments (1 968) 2 505 2 102 Profit attributable to: Equity holders of the parent 5 638 4 997 14 756 Non-controlling interest 342 538 518 Profit for the period/year 5 980 5 535 15 274 Total comprehensive income attributable to: Equity holders of the parent 3 670 7 502 16 858 Non-controlling interest 342 538 518 4 012 8 040 17 376 Earnings per share Number of shares issued (thousands) 173 821 172 221 173 821 Weighted average number of shares (thousands) 173 821 174 326 173 940 Earnings per share (cents) 3.2 2.9 8.5 Diluted earnings per share (cents) 3.2 2.9 8.5 Headline earnings per share (cents) 4 2.5 2.4 3.1 Diluted headline earnings per share (cents) 2.5 2.4 3.1 NOTES 1 Presentation of annual financial statements Trematon Capital Investments Limited (the "company") is a company domiciled in South Africa. The consolidated financial statements of the company for the period ending 29 February 2012 comprise the company and its subsidiaries (together referred to as the "group") and the group`s interest in jointly controlled entities. The interim financial statements contain the information required by IAS 34: Interim Financial Reporting and have been prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS and the AC 500 Standards as issued by the Accounting Practices Board or its successor, the Listings Requirements of the JSE Limited and the South African Companies Act. The accounting policies are in accordance with IFRS and the same accounting policies and method of computation are followed in these interim financial statements as compared with the most recent annual financial statements. The interim financial statements have been prepared on the going concern basis using a combination of the historical cost and fair value basis of accounting. All significant accounting policies have been consistently applied to all periods presented and throughout the group. The consolidated interim financial statements are stated in Rands, which is the company`s functional and presentation currency. The preparation of interim financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or the period of the revision and future periods if the revision affects both current and future periods. The interim financial statements has not been reviewed or audited by Mazars. Unaudited Audited Six months ended Year ended 29/28 February 31 August 2012 2011 2011
R`000 R`000 R`000 2 Non-current assets held for sale Carrying value of non-current asset held for sale 29 443 - - The company entered into an agreement to dispose of its 37.5% interest in the Boulevard Park Trust ("BPT") as announced on SENS on 26 March 2012. The investment in BPT was accounted for as an investment in associate in prior periods. In terms of IFRS, the investment has been carried at the lower of carrying value or fair value less costs to sell and reclassified to non-current assets held for sale. 3 Share-based payment reserve Share-based payment expense in terms of the Trematon Share Incentive Scheme 121 - - In terms of the incentive scheme, which was approved at the annual general meeting of the company on 25 January 2012, participants were issued convertible debentures that can be converted into ordinary shares at the option of the participant after a period of three years. The debentures pay interest at a rate linked to the prime rate of borrowing. A corresponding loan was issued to participants at a rate linked to the prime rate of borrowing. This loan was approved simultaneously with the issue of debentures at the annual general meeting mentioned above. In terms of IFRS 2: Share-based Payments, the convertible debentures and corresponding loans receivable have been eliminated in the preparation of these results. The required share-based payment expense has been recognised as an expense and an adjustment to equity. 4 Investment in subsidiary During the period Trematon entered into an agreement whereby the company has granted a call option in respect of 10% of its shareholding in Club Mykonos Langebaan Limited at a price equivalent to Trematon`s cost which currently equates to R3.45 per share. 5 Headline earnings per share reconciliation Headline earnings per share is calculated as follows: Profit attributable to equity holders of the parent 5 638 4 997 14 756 Realised profit on sale of associate - - (9 764) Reversal of impairment of loan (1 274) (861) - Tax effects on fair value adjustment of non-current assets held for sale - - 420 Headline earnings 4 364 4 136 5 412 Headline earnings per share (cents) 2.5 2.4 3.1 Diluted headline earnings per share (cents) 2.5 2.4 3.1 The calculation of headline earnings per share is based on the weighted average number of 173 821 416 shares in issue during the period (2011: 174 325 620). 6 Segmental information Property
Gaming investments Unallocated R`000 R`000 R`000 Unaudited six months ended 29 February 2012 Revenue 6 015 3 631 174 Profit/(loss) for the period 9 960 5 832 (2 826) Total assets 101 671 123 372 13 547 Total liabilities - 38 762 - Unaudited six months ended 28 February 2011 Revenue 390 3 168 3 115 Profit/(loss) for the period 4 876 4 254 1 569 Total assets 98 330 157 887 13 748 Total liabilities - 74 423 - Audited year ended 31 August 2011 Revenue 390 6 201 3 115 Profit/(loss) for the period 7 805 9 412 4 716 Total assets 99 636 140 555 7 628 Total liabilities - 48 649 - Eliminations Total
R`000 R`000 Unaudited six months ended 29 February 2012 Revenue - 9 820 Profit/(loss) for the period (6 986) 5 980 Total assets - 238 590 Total liabilities - 38 762 Unaudited six months ended 28 February 2011 Revenue - 6 673 Profit/(loss) for the period (5 164) 5 535 Total assets - 269 965 Total liabilities - 74 423 Audited year ended 31 August 2011 Revenue - 9 706 Profit/(loss) for the period (6 660) 15 273 Total assets - 247 819 Total liabilities - 48 649 Domicile and registered office: 2nd Floor, The Hudson, 30 Hudson Street, Cape Town, 8001. PO Box 7677, Roggebaai, 8012, South Africa Contact details: Tel: 021 421 5550, Fax: 021 421 5551 Transfer secretaries: Link Market Services South Africa (Pty) Limited, 19 Ameshoff Street, Braamfontein Directors: M Kaplan (Chairman)*+, AJ Shapiro (Chief Executive Officer), AL Winkler (Financial Director), J Fisher*+, A Groll, AM Louw*+, R Stumpf* * Non-executive + Independent Sponsor: Sasfin Capital, a division of Sasfin Bank Limited Auditor: Mazars Secretary: S Litten Published date: 10 May 2012 Prepared by: The group interim financial results have been prepared under the supervision of the financial director, Mr AL Winkler CA(SA). Date: 10/05/2012 10:52:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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